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Business Officer Magazine
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Federal File

Coverage of legislation and regulatory activity that affects higher education

By Bryan Dickson

College Affordability: President Obama's Plan

With Washington awaiting the start of the Higher Education Act (HEA) reauthorization process, President Obama made his opening move on August 22, unveiling a comprehensive plan to address college costs. As part of his two-day bus tour across upstate New York and northeast Pennsylvania, the president explained during a speech at the University of Buffalo his ideas for making college more affordable.

The cornerstone of Obama's plan includes two related steps. First, the Department of Education (ED) would rate institutions based on access, affordability, and outcomes—including college graduates' earnings and advanced degrees. Those ratings would then tie directly to the amount of federal student aid provided to institutions, with higher-rated institutions receiving more aid than those with lower ratings.

The response on Capitol Hill to the plan has been mixed, with senators and House members on both sides of the issue.

Referring to his 2012 State of the Union address, Obama explained, "We are going to deliver on a promise we made last year, which is [that the] colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up."

Other Ideas for Positive Outcomes

Additional components of the president's college affordability plan include:

  • A Race to the Top for higher education. An expansion of the existing program is designed to "spur state higher education reforms and reshape the federal-state partnership by ensuring that states maintain funding for public higher education."
  • Student academic progress requirements. Students would need to complete a specified percentage of their classes before receiving continued funding. Another proposal suggests that institutions "disburse student aid over the course of the semester as students face expenses, rather than in a lump sum at the beginning of the semester, so students who drop out do not receive Pell Grants for time they are not in school."
  • Tools to promote innovation. A $260 million "First in the World" fund, for example, would test new approaches and regulatory waivers for "experimental sites" for efforts to improve quality and outcomes. Additionally, next year the Department of Labor plans to grant to community colleges and eligible four-year institutions an additional $500 million, a portion of which would be used "to promote accelerated degree paths and credentials" for adult workers and students.
  • Student loan reforms. One idea is to enable all borrowers to qualify for "Pay As You Earn"—a plan that caps loan payments at 10 percent of monthly income—and another is a corresponding enrollment campaign to help borrowers learn more about available repayment options.

Implementation Realities

Implementation of several parts of the president's plan, including the rating system, would not require congressional approval. For example, the administration plans to have the rating system in place before the 2015-16 academic year. Any modification to the allocation process for federal student aid, however, would require such approval—not an easy task, given the current Congress—and is likely the reason for the 2018–19 implementation date. The Race to the Top program would also require action from Congress.

Other regulatory changes require approval via ED's negotiated rulemaking process. The department is already in the middle of the negotiated rulemaking session focused on "gainful employment" regulations and plans to soon form a second rulemaking committee to potentially address student debit cards, fraud, and the department's cash management, state authorization, and return to Title IV rules. Any statutory changes made during the HEA reauthorization would be subject to the formal rulemaking process.

So far, the response on Capitol Hill to President Obama's plan has been mixed, with senators and House members on both sides of the issue. Others in Washington have expressed some concerns with the plan—specifically the fact that the graduation-rate data ED collects do not account for students who transfer from one institution to another.

The coming months will bring many opportunities to weigh in on the president's plan, through public forums and the regulatory process. NACUBO's staff will provide updates and additional information through its electronic newsletter, the Current; Business Officer magazine; and other media, while seeking feedback and weighing in with policy makers.

NACUBO CONTACT Bryan Dickson, policy analyst, 202.861.2505